China’s long-anticipated resurgence in technology, which had been reinvigorated earlier this year by the surge of enthusiasm surrounding artificial intelligence innovations such as those emerging from DeepSeek, has been abruptly disrupted by an entirely different battlefront: an aggressive and costly struggle within the food delivery sector. This bruising confrontation has exacted a heavy toll on the stock values of some of the country’s most dominant e-commerce conglomerates—most notably Alibaba, JD.com, and Meituan—companies that only months ago were celebrated as beneficiaries of renewed investor confidence in China’s tech industry.
At the heart of this struggle lies a ferocious rivalry that has transformed the consumer landscape in China. In their bid to outmatch one another, these three titans of technology have unleashed a torrent of heavily subsidized indulgences, effectively showering shoppers with deals that border on the unbelievable. Everyday luxuries—such as cups of bubble tea or frothy lattes—were offered at prices as low as a single yuan, the equivalent of roughly fourteen US cents. Meals that once carried a premium not only fell within reach of virtually every consumer but were also delivered directly to their doorstep in under half an hour, emphasizing convenience as much as cost. Importantly, the competition extended beyond mere food and beverages. As growth within traditional e-commerce channels slowed, major players sought desperately to secure market share in the increasingly lucrative and fast-evolving instant-delivery sector. Industry observers, including Jason Yu, managing director for Greater China at Kantar Worldpanel, underscored this expansion by pointing out that nearly any product imaginable—whether bouquets of flowers, urgently needed medicines, or ordinary household items like toiletries—could now be dispatched and delivered rapidly.
However, the idyllic era of practically free comforts was never destined to endure indefinitely. The breathtaking discounts were sustained less by sustainable profitability than by an escalating and unsustainable price war. This race to the bottom not only strained the financial viability of the companies involved but also drew the cautious gaze of Chinese regulators, who are wary of unchecked competition at a moment when the world’s second-largest economy continues to grapple with deep structural challenges, including a persistent property slump and the looming threat of long-term deflation.
The origins of the present escalation can be traced back to February, when JD.com formally announced its aggressive move into the food delivery business. This new push forced established players, particularly Meituan and Alibaba, to respond defensively with even more lavish subsidies in order to protect their hard-won market share. The outcome was predictable: all three poured immense sums into consumer discounts, cannibalizing their own profit margins and triggering alarm among investors. Meituan, which holds close to half of China’s food delivery market, recently issued a sobering warning. It cautioned that this quarter would likely bring losses driven by what it described as “irrational competition,” words that sent its share price plummeting by as much as thirteen percent within a single day—contributing to a devastating thirty-three percent decline since the beginning of the year. JD.com fared little better, revealing in its financial disclosures for the quarter ending in June that its net profits had been cut in half, a revelation that corresponded with a decline of more than twelve percent in its stock value. As for Alibaba, while its fiscal first-quarter results are imminent, the damage to investor sentiment is already visible: its New York-listed shares have fallen nearly twenty percent from their March peak, even though year-to-date they remain significantly higher overall.
The consumer benefits of this aggressive competition are undeniable, yet Beijing has made it increasingly clear that it sees excessive subsidy-driven warfare as destabilizing and harmful to the broader economy. With national priorities focused on stabilizing growth during a time of property sector fragility, authorities are stepping in to curtail behavior they characterize as disorderly market conduct. In May and June, China’s most prominent market regulator summoned representatives of Alibaba, Meituan, and JD.com, demanding a halt to these uncontrolled escalation tactics. All three companies, facing mounting political as well as financial pressure, pledged to exercise restraint moving forward.
For ordinary consumers, this intervention means that the extraordinary stretch of ultra-discounted indulgence is drawing to a close. The moment when coffee could be purchased for little more than a token sum, or when restaurant-grade meals were practically given away, is unlikely to last much longer as economics and regulation begin to reassert themselves. Analysts like MingYii Lai, a consultant at Daxue Consulting, candidly acknowledge that the prevailing model of subsidies was never fundamentally viable. Companies have been burning through billions simply to capture market share, an approach that cannot be justified either to investors seeking returns or to officials aiming for sustainable industry practices. Jason Yu from Kantar Worldpanel reinforces this perspective, cautioning that both financial losses and political scrutiny mean it is not in any company’s interest to continue this aggressive level of subsidization.
The immediate effects are already becoming noticeable. The most extravagant offers—such as snacks, teas, and burgers sold for mere pennies—are beginning to vanish from platforms, although milder price cuts and weekend promotions still remain part of the competitive strategy. According to Yu, the disappearance of such subsidies will likely accelerate in the near future; within one or two years, the expectation is that companies will abandon these promotional tactics altogether. Their long-term bet is that consumer habits, once firmly established with the conveniences of delivery, will endure even without discounts. When that moment arrives, buyers will inevitably face delivery costs that better reflect the true price of the service. The temporary golden age of impossibly cheap convenience, once emblematic of China’s hypercompetitive digital economy, is thus gradually giving way to a new reality shaped by business pragmatism and regulatory oversight.
Sourse: https://www.businessinsider.com/china-food-delivery-price-war-involution-competition-alibaba-jd-meituan-2025-8
